JUDGMENT Soumen Sen, J: The order of the Chairman dated 5th October, 2012 refusing to renew the licence issued under the Insurance Regulatory and Development Authority (Insurance Brokers) Regulations, 2002 (hereinafter referred to as “Brokers Regulations 2002”) is the subject-matter of challenge in this writ application. The petitioner was functioning as a composite broker in terms of a licence initially granted on 18th February, 2003 which was subsequently renewed on 13th March, 2006 for a period of 3 years on and from 18th February, 2003. On 31st December, 2008, an application was filed for renewal. The authority concerned declined to renew the said licence. This has resulted in a writ application being filed and ultimately consequent upon an order being passed by the Hon’ble Supreme Court on 6th July, 2012, the Chairman considered the application filed for renewal on 31st December, 2008 and by a detailed order dated 5th October, 2012 rejected the said application for grant of renewal. This order forms the subject-matter of challenge in this writ application. Mr. Saktinath Mukherjee, the learned Senior Advocate appearing with Mr. Partha Sarathi Sengupta on behalf of the petitioners contended that the Chairman has completely misdirected his mind and acted arbitrarily, discriminatorily and improperly in rejecting the said application. It was argued that in view of Section 42D(3) of the Insurance Act, 1938 and the Office Note dated 7th May, 2009, the only course open to the Chairman was to impose penalty on a finding being arrived at for violation of Regulation 23 of the Brokers Regulations, 2002 and it was not open to the Chairman to reject the said application. It was submitted that the only ground on which the renewal declined was that the petitioner had violated Regulation 23 of the Brokers Regulations, 2002. It was contended that the alleged violations of Regulation 23 occurred during 2003 and 2007 and it was on the basis of such stale charges on 5th October, 2012 renewal was declined. It was submitted that the only ground on which the renewal declined was that the petitioner had violated Regulation 23 of the Brokers Regulations, 2002. It was contended that the alleged violations of Regulation 23 occurred during 2003 and 2007 and it was on the basis of such stale charges on 5th October, 2012 renewal was declined. The petitioner as a composite broker deposited all the premiums and/or claims in the designated bank account opened with HSBC in 2003 but utilized a portion of the said amount from the designated bank for investments unknowingly and on a bona fide belief that such investment is permissible and continued with such practice till the petitioner was communicated on January 25, 2008 that the Regulatory Authority on the basis of on site inspection made during August 2007 found violation of Regulation 23 by making investments in mutual funds. It was contended that all throughout since the initial grant of licence, the petitioner made available the relevant books of accounts, the audited balance sheets and half yearly returns which would show the utilization of the said amount for investments in mutual funds but the respondent authorities did not object to the utilization of such amount from the Insurance Bank Account (hereinafter referred to as “IBA”). The very fact that the licence was renewed in 2006 would give an unmistakable impression and induced a belief that the Regulatory Authorities never considered utilization of a part of the said premium amount for investments on mutual fund to be of any consequence and far less a major violation. Mr. Sengupta pointed out various discrepancies in the impugned order which, inter alia, include that although it was mentioned that a designated bank account was opened in 2008 but the said designated account was in operation since 2003 which was accepted in Paragraph 2.5 of the impugned order. Moreover, if there had been any violation of Regulation 23 then the authorities were under an obligation and a duty to inform the petitioner about such violation so that in the year 2006 itself, the petitioner could have remedied the same. It is further submitted that the Regulatory Authority did not form an opinion that the said investment was made in unsafe fund and there had not been a single instance of any default of any kind either in payment of premium or disbursing the claim amount. It is further submitted that the Regulatory Authority did not form an opinion that the said investment was made in unsafe fund and there had not been a single instance of any default of any kind either in payment of premium or disbursing the claim amount. The impugned order, according to the petitioner, suffers from a hostile discrimination against the petitioner and the same would be adequately reflected from the order of the Chairman in attempting to distinguish the cases of other brokers and/or insurance companies committing same and/or similar offences. The renewal of licence is governed by Regulation 13. The Chairman did not take into consideration the Office Note dated 7th May, 2009 which clearly stipulates the approach that is required to be adopted in such matters and distinction has to be made in case of repeated violation of several regulations and single violation. The petitioner was never informed earlier to January 25, 2008 that the petitioner could not utilize the said amount for investment in mutual fund. The petitioner immediately remedied the breach and by March, 2008, the entire amount was restored to the designated bank account. In view thereof, there was no violation of Regulation as on 31st December, 2008 when the application for renewal was filed. The corpus being restored in the “Insurance Bank Account” prior to the application filed for renewal, the said authority could not have rejected the said application for renewal inasmuch as violation of Regulation 23 is not a disqualification for renewal of licence under Section 42D(3) of the Insurance Act, 1938. The Insurance Company did not consider such manner of utilization of insurance premium/claim as a serious matter or a major breach of the conditions of the licence particularly in view of renewal on 13th March, 2006. Moreover, the Regulatory Authority had failed to take into consideration that there had been not a single instance of default either in the payment of the premium or disbursing any claim amount and no one has suffered any prejudice by reason of such alleged violation of Regulation 23 of the Brokers Regulation, 2002. It was contended that renewal of licence is governed by Section 42D(3) of the Insurance Act and Regulation 13. Under Regulation 13(3) it is provided that the renewal shall be dealt with in the manner specified in Regulation 9. It was contended that renewal of licence is governed by Section 42D(3) of the Insurance Act and Regulation 13. Under Regulation 13(3) it is provided that the renewal shall be dealt with in the manner specified in Regulation 9. Under Section 42D(3) of Insurance Act the licence is liable to be renewed unless the applicant incurs any of the disqualifications mentioned in Clauses (b), (c), (d), (e) and (f) of Section 42(4) of the Insurance Act. It is undisputed position that the petitioner has not incurred any of the disqualifications under Section 42D(3). In the event, there be any conflict between Regulation 9 and Section 42D(3), the provisions of Section shall prevail, the Regulations being subordinate legislation. However, in paras 4.9, 4.10, 4.11, 4.12, 4.13, 4.15 and 4.16 of the impugned order the respondent no.2 relying upon Section 42E(2) which confers upon IRDA rule making power for capital, form of business and other conditions to act as intermediary, has purported to hold that disqualifications mentioned in Section 42D(3) cannot be the only disqualification to deny renewal of licence. The Chairman relying upon Section 42D(6) which gives power to cancel licence, held in Para 4.12 that reasons for which licence can be cancelled, the renewal also can be refused for same reasons. While coming to this conclusion the respondent no.2 ignored the safeguards provided under Regulations 36, 37 and 38 in respect of initiation of cancellation proceedings. In dealing with the violation of Regulation referred to in Paragraph 2.5 of the impugned order dated 5th October, 2012, it was argued that it would appear from the said impugned order that the authority had proceeded on the basis that between 2003 and 2008 there were 58 violations of Regulation 23 and to highlight this aspect, he had relied upon the instances as on 30th January, 2004 and 28th February, 2004. It was submitted that in spite of such investments being in full knowledge of the Authority by reason of regular filing of half yearly financial statements as on 30th September and 31st March under Regulation 26(1) and annual financial statements under Regulation 25(2), the Composite Licence of Heritage was renewed on 13th March, 2006 for a period of 3 years w.e.f. 18th February, 2006. At the time of such renewal, the Authority was not in doubt that the grant of such renewal would not be in the interest of the policyholders. At the time of such renewal, the Authority was not in doubt that the grant of such renewal would not be in the interest of the policyholders. This becomes relevant in view of subsequent stand being taken by the Chairman that licence could not be renewed in view of Regulation 9(2)(I) of the Brokers Regulation, 2002. The investments made up to March, 2006 could not have been relevant for denying renewal application dated 31st December, 2008 having regard to the aforesaid fact. All investments in mutual funds were in liquid fund, devoid of share, market risks and encashable at 24 hours’ notice. The alleged violation of Regulation 23 if at all it was a violation, was remedied in March, 2008. The petitioner was, thereafter, allowed to function. The licence continued to be valid and operative by reason of Regulation 15 during pendency of renewal application made on 31st December, 2008 though the licence period in terms of Regulations 12 expired on 17th February, 2009. The respondent authorities did not take any steps for suspension or cancellation of licence under Regulation 35. If the authorities were certain that the withdrawal of funds from the Insurance Bank Account was a major breach and is a violation of the Code of Conduct, they could have taken such steps. The conduct of the respondents would clearly show that they did not treat the utilization of the said amount from the Insurance Bank Account to be a breach of trust or a major offence. On the other hand, the show cause notice dated 20th April, 2010 issued for proceeding for cancellation of licence was withdrawn as recorded in the order dated 20th May, 2010. The petitioner was subjected to hostile discrimination. In case of K.M. Dastur Insurance Brokers Pvt. Ltd. and Reliance General Insurance Co. Ltd., the interest of policy holders was really at stake and in those two cases, it was providence that policy holders did not suffer. It was submitted that the impugned order suffers from an error of fact and law apparent on the face of the order. In case of K.M. Dastur Insurance Brokers Pvt. Ltd. and Reliance General Insurance Co. Ltd., the interest of policy holders was really at stake and in those two cases, it was providence that policy holders did not suffer. It was submitted that the impugned order suffers from an error of fact and law apparent on the face of the order. The adjudicating authority failed to take into consideration that in terms of Regulation 23, the petitioner had communicated in the year 2003 itself regarding the designated bank account and, accordingly, observation made by the authority in the order that they were not informed of such designated bank account is an error apparent on the face of order. The documents on record would clearly show that such intimation was received by the authorities concerned in 2003. Moreover, the authorities concerned during inspection could have easily ascertained that from such designated bank account, sums were withdrawn for investment in mutual fund. It was further argued that there was some incorrect recording in the minutes of the proceeding and, accordingly, the learned Advocate representing the petitioner by a letter dated September 15, 2012 objected to such recording which were not taken into consideration while passing the impugned order. It was argued that while considering an application for renewal, the authorities concerned is only to find out if the condition under Section 42D(3) has been fulfilled. It is submitted that the ground on which the said application for renewal was rejected, was not the ground that was available to such statutory authority for refusing to allow renewal. The said ground can form the basis for cancellation of a licence. This is a clear error of law apparent on the face of order. Mr. Saktinath Mukherjee, the learned Senior Counsel in supplementing the aforesaid submissions further submitted that the case of a non-renewal of licence has to be viewed more seriously than granting of such licence. Mr. Mukherjee placing reliance on Sections 42, 42D of the Insurance Act, 1938 submitted that it is clear from the said provisions that there are different considerations for grant, renewal and cancellation of a licence. Section 42 deals with the grant of licence to an insurance agent. Section 42D deals with issue of licence to intermediary which includes the composite broker. Mukherjee placing reliance on Sections 42, 42D of the Insurance Act, 1938 submitted that it is clear from the said provisions that there are different considerations for grant, renewal and cancellation of a licence. Section 42 deals with the grant of licence to an insurance agent. Section 42D deals with issue of licence to intermediary which includes the composite broker. Section 42D(3) clearly mentions that in the event, the applicant is not found to be disqualified under Clauses (b), (c), (d), (e) and (f) of Sub-section (4) of Section 42 and has applied in accordance with Section 42(3) of the Insurance Act, 1938 along with proper fees, the authority cannot deny renewal of the said licence. The authority cannot reject the said application on the basis of Section 42 (4)(g) since that clause was not relevant while considering the application for grant of renewal of licence. The said section was introduced in the Insurance Act, 1938 by way of an amendment on 19th April, 2000. It is argued that Regulation 9 of the Regulation 2002 would not apply in such a case since a regulation cannot supersede the provisions of the principal Act. The said regulation cannot have an elevated position than that of the principal statute and it must sub verse and supplement the principal statute. It was argued that the authorities concerned cannot by making reference to Regulation 9(2)(I) refuse to renew the lincece since such ground was not consistent with Section 42D(3) of the Insurance Act, 1938. It was argued that such regulations were framed under Section 114A of the Insurance Act, 1938 and Sections 14 and 28 of the IRDA Act, 1999 and none of the statutes authorize the authorities to deny renewal on the ground that the authority is of the opinion that the grant of licence would not be in the interest of the policyholders. In assailing the said order, Mr. Mukherjee relied upon the Office Notes dated 7th May, 2009, 28th August, 2009, and recommendation dated 18th September, 2009 argued to have been approved by the Chairman on 23rd September, 2009. The recommendation dated 18th September, 2009, it was argued unanimously recommended that the offence might be compounded at Rs.5 lakhs with a warning that any repetition of such offence in future would attract more stringent action. The recommendation dated 18th September, 2009, it was argued unanimously recommended that the offence might be compounded at Rs.5 lakhs with a warning that any repetition of such offence in future would attract more stringent action. The relevant recommendations of the officers being the Deputy Director, Joint Director and Executive Director made on 18th September, 2009 are reproduced herein below:- Office Note: 18th September Re: Renewal of Licence – Heritage Insurance Brokers Pvt Ltd. The licence was due for renewal on 17th February, 2009. The note on pre-page may kindly be gone through. The following breaches of Regulation were observed against the broking entity. a. Regulation 10(1) read with circular issued in this regards as the capital of the company consist of Class A and B shares. These shares do not have an equal voting right. b. The company has failed to disclose the information about the third parties arrangement for service providers in Form G of on line returns. This it is a violation of Regulation 28(1) c. The company has failed to follow the recognized standards of reinsurance placements and adhere to the guidelines contained in circular No.020/NL/IRDA/06 dated 15th September, 2006 in respect of reinsurance transactions. d. Investment of the funds from insurance bank account mandated under Regulations 23 has been made in Mutual Fund/Others. A. Compounding penalty of Rs.5 lakhs may be imposed and B. A warning that any repetition of such instance in future will attract more stringent action may be issued. C. The broking entity may be advised to furnish a certificate from CA that all the money taken out from Regulation 23 has been kept in the bank account. In view of the above violations, we recommend that the renewal application will be processed after completion of penalty proceedings. R K Sharma DD Suresh Mathur Joint Director Prabodh Chander Executive Director Mr. Mukherjee submitted that after the signatures of the three responsible officers of the respondents, the Chairman put his signature which clearly signified that the Chairman had approved the said recommendations. In fact, a show cause notice was prepared for levy of penalty which was followed by a show cause notice dated 12th October, 2009. It is further argued that the show cause notice would show that the broker licence was extended for a period of 12 months from 17th February, 2009 to facilitate the completion of the disciplinary proceeding. In fact, a show cause notice was prepared for levy of penalty which was followed by a show cause notice dated 12th October, 2009. It is further argued that the show cause notice would show that the broker licence was extended for a period of 12 months from 17th February, 2009 to facilitate the completion of the disciplinary proceeding. Subsequently, another show cause notice was issued on 28th April, 2010 for cancellation of the composite broker licence 114 which, however, was not proceeded with. Mr. Mukherjee had referred to series of orders that were passed in earlier proceedings concerning the composite broker licence. It was submitted that in view of the order of the Hon’ble Supreme Court dated 6th July, 2012, it was incumbent upon the Chairman to hear the application filed by the petitioner on 31st December, 2008 for renewal of licence and pass fresh order uninfluenced by any order passed by IRDA or the High Court. It was, thus, submitted that the Chairman was required to consider the said application for grant of renewal in terms of Sections 42, 42D(3) and in no other manner. It was submitted that as on 31st December, 2008 all monies utilized for mutual fund investments were withdrawn and deposited in the insurance bank account in terms of Regulation 23 of the 2002 Regulation and, accordingly, the question of taking any action for violation of the Act or the Regulation could not and does not arise, inasmuch as, even if it is assumed that there was a violation of Regulation 23, such breach was remedied before the application for renewal was filed and in view of Regulation 23(h) of the 2002 Regulation, such renewal could not have been denied. It would appear that as soon as the petitioner was informed about such withdrawal of amount from ‘segregated amount’, the petitioner took immediate steps to restore the position. The application of the petitioner for renewal was required to be considered under Section 42D(3) and the authority could not have rejected such application on the basis of Section 42(4)(g) of the Insurance Act. It was submitted that in case of renewal, Section 42(4)(g) does not apply and the said ground is only available in the event the authority decides to cancel the licence. The ground for cancellation cannot form the basis for non-renewal of the licence is in short the submission of Mr. Mukherjee. It was submitted that in case of renewal, Section 42(4)(g) does not apply and the said ground is only available in the event the authority decides to cancel the licence. The ground for cancellation cannot form the basis for non-renewal of the licence is in short the submission of Mr. Mukherjee. It was submitted that the interpretation given to various sections by the Chairman, namely, Section 42D(3) of the Insurance Act, 1938, Regulations 9, 13 and 14 of the 2002 Regulations suffered from serious misconception of law and there are error of law apparent on the face of the order. Mr. Mukherjee has relied upon 79 CWN 883 (Scotts (P) Ltd. & Ors. Vs. Corporation of Calcutta & Ors.) for the proposition that the corporation unlike a natural person has no power to do anything unless such powers are conferred on it by the statute which creates it. The said decision was relied upon in order to show that the Chairman could not have travelled beyond Section 42D(3) of the Insurance Act, 1938 in considering the application for grant of renewal. Mr. Mukherjee reminds this Court of principle laid down by the Privy Council in Nazir Ahmed’s case where it was held that if the statute provides an act to be done in a particular manner, the same is required to be done in that manner only and in no other manner. It is argued that the Chairman is required to exercise its power in terms of Section 42D(3) and not in any other manner since the Chairman is a creature of a statute and the statute provides such application for renewal to be considered in terms of Section 42D(3) and in other manner. In this context, Mr. Mukherjee has relied upon the following decisions:- i) 2002(1) SCC 633 (Para 27) (Commissioner of Income Tax, Mumbai Vs. Anjum M.H. Ghaswala & Ors.); ii) 2000(6) SCC 179 (Haresh Dayaram Thakur Vs. State of Maharashtra & Ors.) It was argued that the Regulations 2002 are subordinate and subservient to Insurance Act, 1938. In this context, Mr. Mukherjee has relied upon the following decisions:- i) 2002(1) SCC 633 (Para 27) (Commissioner of Income Tax, Mumbai Vs. Anjum M.H. Ghaswala & Ors.); ii) 2000(6) SCC 179 (Haresh Dayaram Thakur Vs. State of Maharashtra & Ors.) It was argued that the Regulations 2002 are subordinate and subservient to Insurance Act, 1938. The manner in which such application required to be considered for renewal was clearly mentioned in Section 42D(3) and any rule which attempts to add, alter or amend such section would be inconsistent with the Insurance Act or IRDA Act and in such situation the rules and regulations to the extent they are inconsistent would require to be ignored and the substantive provisions of the principal statute is to be followed. It was argued that the regulations are delegated legislations and such regulations cannot override and/or supersede the statute which created it. The principal statute, namely, the Insurance Act and the IRDA Act have breathed in life the said regulations and it was not open by way of a delegated legislation to put conditions which are inconsistent with the principal statute. In such a situation, there is no need even to challenge such provisions of the regulations as ultra vires since the authority is only to exercise its power in accordance with the provisions mentioned in the principal statute, namely, the Insurance Act, 1938. In any event, Regulation 9 has to be read subject to the substantive provision of the principal Act, namely, Insurance Act, and particularly Section 42D(3) of the Insurance Act, 1938 in dealing with an application for renewal of licence. It was submitted that IRDA Act is an Act of 1999 and Section 42D was introduced in the Insurance Act by way of an amendment of the Insurance Act and the said section came into effect on 19th April, 2000. Accordingly, the Chairman was required to follow the procedure prescribed under the said Act and cannot reject the said application on the basis of Regulation 9(2)(I), on grounds, that are inconsistent with and/or addition to the requirements mentioned under Section 42D(3). It was submitted that to the extent Regulation 9(2) of Brokers Regulations 2002 is inconsistent; the same is required to be ignored. It was submitted that to the extent Regulation 9(2) of Brokers Regulations 2002 is inconsistent; the same is required to be ignored. The Court is required to interpret the said Section 42D(3) and Regulation 9 of Brokers Regulations, 2002 in such a manner that such regulation is intra vires and the approach would be to ignore such clauses in Regulation 9 of 2002 Regulations which are inconsistent with Sections 42 and 42D(3) of the Insurance Act otherwise Sections 42 and 42D(3) of the principal Act would be subordinate to the rules and regulations made there under. The Regulations cannot supplement but only supplement the parent statute. The regulations must be consistent with the provisions of the Act and any provision mentioned in the regulation which is inconsistent with the principal Act is required to be discarded. In this context, he has relied upon the following decisions:- i) 1969(2) SCC 351 (Para 5) (The Income Tax Officer, Alleppy Vs. M.G. Ponnoose & Ors. etc.); ii) 1972(2) SCC 601 (Hukum Chand Vs. Union of India); iii) 1988(3) SCC 553 (Paras 10, 13 and 14) (Commissioner of Income Tax Vs. Bazpur Co-operative Sugar Factory Ltd.); iv) 2012(7) SCC 683 (Union of India & Ors. Vs. S. Srinivasan) It is argued that Regulation 9(2)(I) is to be read with the substantive provision of Sections 42 and 42D(3) and is required to be construed in a manner in order to make the said regulation intra vires. The substantive provision of Regulation 13(2) is required to be read subject to substantive provision of Section 42D(3) of the Insurance Act. Regulation 9(2)(H) and (I) are to be read in the aforesaid context in order to make all the provisions intra vires. Regulation 9(2)(H) and (I) cannot override the substantive provision of Sections 42 and 42D(3) of the Insurance Act, 1938. The interest of the policyholders or violation of code of conduct could not be a ground on the basis of which the Chairman could reject an application for renewal of licence. On the ground of discrimination and the conduct of member (Non-life), reliance was placed on AIR 1979 SC 1628 (Para 10) (Ramana Dayaram Shetty v. The International Airport Authority of India & Ors.) in which the Hon’ble Supreme Court quoted the oft-quote observations of Justice Frankfurter. On the ground of discrimination and the conduct of member (Non-life), reliance was placed on AIR 1979 SC 1628 (Para 10) (Ramana Dayaram Shetty v. The International Airport Authority of India & Ors.) in which the Hon’ble Supreme Court quoted the oft-quote observations of Justice Frankfurter. The Hon’ble Supreme Court held that it is a well-settled rule of administrative law that an executive authority must be rigorously held to the standards by which it professes its actions to be judged and it must scrupulously observe those standards on pain of invalidation of an act in violation of them. This rule was enunciated by Mr. Justice Frankfurter in Vitarelli v. Seaton (1959) 359 US 535: 3 L Ed 2d 1012. Mr. Mukherjee has also relied upon a decision reported at AIR 1984 SC 1499 , Para 6 and 9 (Sengara Singh & Ors. Vs. the State of Punjab & Ors.) in order to demonstrate that the other brokers and/or insurance companies same or similarly situated were levied all with penalty. It was argued that K M Dastur Insurance Brokers Pvt. Ltd. and Reliance General Insurance Co. Ltd. have violated the regulations but no stringent measure was taken against them. The petitioner was, however, singled out and punished severely by denying renewal of licence which had clearly interfered with the right of the petitioner to carry on business which is zealously protected under Article 19 (1)(g) of the Constitution of India. Sengara Singh (supra) was cited in order to show that the Hon’ble Supreme Court disapproved the action of the State in not reinstating some of the dismissed members of the police authorities while police officers committed some offences were subsequently reinstated. The Hon’ble Supreme Court recorded that the State failed to explain to the Court the distinguishing features in no reinstating about thousands dismissed members and, therefore, the Hon’ble Supreme Court was satisfied in putting all of them in same bracket. It is, thus, submitted that if similar and/or same kind of violations were let of while the petitioner was penalized. It is also argued that the member Non-life in Clause 13 of the Office Note dated 28th September, 2009 observed that if violation involving sizeable amount, suspension/cancellation under Section 34 may be considered. It is, thus, submitted that if similar and/or same kind of violations were let of while the petitioner was penalized. It is also argued that the member Non-life in Clause 13 of the Office Note dated 28th September, 2009 observed that if violation involving sizeable amount, suspension/cancellation under Section 34 may be considered. It is, thus, argued that even the member (Non-life) did not find it relevant with regard to the renewal of licence and in any event, imposition of fine was not completely ignored. It was also argued that an action being taken under Section 34, the procedure prescribed under Sections 36, 37 and 38 needs to be followed which is not being admitted in the instant case. Mr. Mukherjee also placed much emphasis on the office note dated 7th May, 2009 and 28 August, 2009 in order to establish that such notes were prepared in order to lay down uniformity and consistency in approach to be followed after study of most repeated violations of several regulations. The approach suggested by the said Committee was as under:- (i) Finding of inspection and irregularity notice should be communicated to the broking company and explanation should be sought. (ii) Reasonable opportunity of hearing be given. (iii) After hearing, the broking company should be issued warning and directed to take remedial measures. (iv) If default still persisted, penalty under Section 102 of Insurance Act be imposed. (v) If violation continued thereafter, action for suspension/cancellation should be initiated. It was submitted that the Office Note dated 28th August, 2009 clearly deals with violation of Regulation 23 and suggested course of action in such a case is as under:- (i) Levy of penalty of Rs.5 lacs when the irregularity is noticed for the first time. (ii) Second time decision to be taken for suspension or cancellation after conducting inquiry and seeking specific comments of insurers/reinsurers involved. Mr. Mukherjee has also relied upon following decisions in respect of the Office Notes in order to show that such Office Notes are binding on the respondents:- i) 1999(4) SCC 599 (Para 22) (Uco Bank, Calcutt Vs. Commissioner of Income Tax, W.B.); ii) 2008(14) SCC 283 (Para 27) (Pradip J. Mehta Vs. Commissioner of Income Tax, Ahmedabad); iii) 2012(3) SCC 784 (Paras 23, 24) (Catholic Syrian Bank Ltd. Vs. Commissioner of income Tax) Per contra, Mr. Commissioner of Income Tax, W.B.); ii) 2008(14) SCC 283 (Para 27) (Pradip J. Mehta Vs. Commissioner of Income Tax, Ahmedabad); iii) 2012(3) SCC 784 (Paras 23, 24) (Catholic Syrian Bank Ltd. Vs. Commissioner of income Tax) Per contra, Mr. Aninda Kumar Mitra, the learned Advocate General submitted that full accurate fact has not been stated in the petition and on that ground the petition is liable to be dismissed. It was argued that an impression was sought to be created that the Regulatory Authority was aware of diversion of funds from the Insurance Bank Account for investment in mutual funds and/or utilization of the same in other investments. The same is factually incorrect and contrary to the e-mails and letters annexed to the petition. It was argued that the claim of the petitioner that there was on-site inspection by IRDA on April, 2003 was factually incorrect. In fact, there was no on site inspection prior to 2007. The composite brokers licence was issued under Regulations 2002 only on 18th February, 2003 and soon thereafter on the basis of the information furnished the Regulatory Authority wanted certain clarifications in order to ascertain whether there has been any diversion of attention by the broker company and if the said company is engaged in any other business activity which is not permissible under the law. Such broker is required to devote entirely for the said business and in order to discharge its duty; the said broker is required to open an Insurance Bank Account. The enquiries all made prior to the inspection carried in 2007 were limited to the aforesaid issue. In fact, the half yearly audited balance-sheet and other documents that were made available to the Regulatory Authority prior to 2007 would not indicate and, in fact, does not indicate that such investments in mutual funds and inter-corporate deposits and/or fixed deposits were being created out of the amounts deposited by outsourcing the “Insurance Bank Account”. The said balance-sheet would not show any nexus between the amounts that are required to be deposited in the insurance bank account and the investments that have been made by the brokers. It was argued that the concept of intermediary or composite broker was introduced by the IRDA Act, 1999. The said Act came into force on 19th April, 2000. The said balance-sheet would not show any nexus between the amounts that are required to be deposited in the insurance bank account and the investments that have been made by the brokers. It was argued that the concept of intermediary or composite broker was introduced by the IRDA Act, 1999. The said Act came into force on 19th April, 2000. The said Act, for the first time, defines intermediary or insurance intermediary which include insurance brokers, reinsurance brokers, etc. On 16th October, 2002, Brokers Regulations 2002 was notified. The said Regulation was framed in exercise of powers conferred by Section 114A of the Insurance Act, 1938 read with Sections 14 and 26 of the IRDA Act, 1999 in consultation with the Insurance Advisory Committee. In the meantime, simultaneously with coming into force of the IRDA Act, 1999, certain provisions of the Insurance Act, 1938 were amended which, inter alia, include Section 2(10B) which defines intermediary or insurance intermediary of Section 42D and Section 114A of the Insurance Act, 1938. Section 114A of the said Act gives power to the authority to make regulations consistent with the Insurance Act, 1938 and the rules made there under in order to carry out the purposes of the Act. The said power includes to frame regulations with regard to Code of Conduct under Clause (g) of Subsection 4 of Section 42 for issue of a licence to intermediary or an insurance intermediary of Sub-section 1 of Section 42D and the Code of Conduct under Clause (g) of Sub-Section 5 of Section 42D. Similarly, IRDA which also came into operation on the same date, namely, 19th April, 2000 gives power to the authority under Section 14 to regulate, frame and ensure orderly growth of the insurance business and re-insurance business. The powers and functions of the Authority under Section 14(2), inter alia, include issuance of a certificate of registration, renew, modify, withdrawn, suspend or cancel such registration and specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents. The powers and functions of the Authority under Section 14(2), inter alia, include issuance of a certificate of registration, renew, modify, withdrawn, suspend or cancel such registration and specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents. Section 26 of IRDA Act, 1999 gives power to the Authority to make regulations in consultation with the Insurance Advisory Committee in respect of any of the matters mentioned thereof which, inter alia, include - “any other matter which is required to be, or may be, specified by regulations or in respect of which provision is to be or may be made by regulations”. The Brokers Regulations was framed in 2002 and Schedule III of the Regulation contains the Code of Conduct. In fact, Regulation 21 requires insurance broker to abide by the Code of Conduct as specified in Schedule III. The application for composite broker licence is regulated in the manner as indicated Form A being Schedule I to the Regulations 2002. Of the various declarations that such an application is required to furnish “I/We have gone through the Insurance Regulatory and Development Authority (Insurance Brokers) Regulations, 2002 and am/are satisfied that I/We am/are eligible to apply for the insurance broker’s licence” is one of them. It was argued that in 2000, there was no Code of Conduct. The Regulations 2002 was framed in exercise of power under two statutes, namely, Insurance Act, 1938 and IRDA Act, 1999. Both the statutes contemplate making of a regulation. While Section 114A of the Insurance Act, 1938 refers to Code of Conduct, Section 26 of IRDA Act, 1999 gives the power to the authority to make such regulations which are consistent with the statute and to carry out the purpose of the Act. In response to the interpretation given on behalf of the writ petitioner with regard to various provisions of the Insurance Act, 1938, IRDA Act, 1999 and the Brokers Regulations, 2002, the learned Advocate General submitted that absurdity should be avoided by harmonious interpretation of statute and if required Section 42D(1) and 42D (3) should be reconciled harmoniously. It was argued that Section 42D(3) came into force on 19th April, 2000. On 19th April, 2000 there was no Code of Conduct. Accordingly, the Disqualification under Section 42D (5)(g) could not have been mentioned in Section 42D(3). It was argued that Section 42D(3) came into force on 19th April, 2000. On 19th April, 2000 there was no Code of Conduct. Accordingly, the Disqualification under Section 42D (5)(g) could not have been mentioned in Section 42D(3). The Code of Conduct being Schedule III of Brokers Regulations, 2002 came into effect on 17th October, 2002. Thus, in Section 42D(3) of Insurance Act, 1938 which came into effect on 19th April, 2000, there was no question of including disqualification on the ground of violation of Code of Conduct, namely, Section 42(4)(g). The acceptance of the submission on behalf of the petitioner would mean that the Broker can go on violating Code of Conduct and will yet obtain licence at the interval of three years and carry on business in violation of Code of Conduct. This will defeat the whole object and purpose of the Acts. The authority will be bound to renew a licence which is liable to be cancelled under Section 42D(6) for violation of Code of Conduct. Immediately upon renewal of licence, authority will cancel the licence under Section 42D(6). A licence will thus be renewed only for the purpose of cancellation. Section 42(4) and Section 42D(3) of Insurance Act, 1938 speak of disqualifications which are in respect of individuals, a natural person, and not in respect of artificial person viz. a Company. Sec 42D(3) does not authorize the Broker Company to act as broker in violation of Code of Conduct. Sec. 42E of Insurance Act was inserted on 23rd September, 2003 empowering the authority to specify the other conditions to act as a broker by making regulations in that behalf. Such Regulation would be without prejudice to the provisions contained in the Insurance Act, 1938. Regulation 3 of Brokers Regulations, 2002 mandates that every Insurance Broker has to abide by the Code of Conduct as specified in Schedule III of the Brokers Regulations, 2002. This Regulation is framed under the immunity given by Sec. 42E(2). Regulation 34(h) provide for cancellation or suspension of the Licence if the broker’s conduct is not in accordance with the Code of Conduct. The Brokers Regulations, 2002 is made also in exercise of power under IRDA Act, 1999, Sections 14 and 26. Section 14(c) and Section 26(2)(e). This Regulations are not in any way inconsistent with any provisions of IRDA Act, 1999. These Regulations are also not repugnant to Insurance Act, 1938. The Brokers Regulations, 2002 is made also in exercise of power under IRDA Act, 1999, Sections 14 and 26. Section 14(c) and Section 26(2)(e). This Regulations are not in any way inconsistent with any provisions of IRDA Act, 1999. These Regulations are also not repugnant to Insurance Act, 1938. “Shall be” in Section 42D(3) is directory and not mandatory. The Authority should consider other relevant factors, e.g. prejudicial to the interest of policyholders etc. and Regulation No.9 and may refuse renewal of licence of a Corporate broker. The validity of Regulations, 2002 is not challenged in this writ petition which should accordingly be decided on the basis that the said regulations are valid. The question whether the Regulation if interpreted in a particular manner would be inconsistent with Insurance Act, 1938 does not arise in this case. In any event, language of Regulation No.9(2)(H) and (I) are clear and unambiguous and are not capable of reading in any manner to mean that licence can be renewed even if Code of Conduct has been violated by a Corporate Broker. Section 42E of the Insurance Act, 1938 was inserted w.e.f. 23rd September, 2002 which deals with, inter alia, other conditions to act as an intermediary or insurance intermediary. A firm or a company comes within the meaning of “intermediary or insurance intermediary” as defined in Section 2(1)(f) of the IRDA Act, 1999 which came into effect on 19th April, 2000. This Section 42E has given power to IRDA to frame regulations, inter alia, other conditions to act as an intermediary or insurance intermediary, without prejudice to the provisions contained in the Insurance Act, 1938. Regulation 13(3) of Broker’s Regulations, 2002 lays down that a renewal of licence shall be dealt with in the same manner as is specified under Regulation 9. Thus, while considering a renewal application, Regulation 9 of Broker’s Regulation is to be applied which deals with consideration of application. A consideration of an application for renewal the application may be renewed or the same may not be renewed. Under this Regulation, an application for licence may be allowed or may be rejected. Thus, while considering a renewal application, Regulation 9 of Broker’s Regulation is to be applied which deals with consideration of application. A consideration of an application for renewal the application may be renewed or the same may not be renewed. Under this Regulation, an application for licence may be allowed or may be rejected. Therefore, while dealing with renewal of a licence of an intermediary or insurance intermediary Section 42D(1) becomes pertinent which speaks about “a person” and “licence to act” as opposed to Section 42D(3) which deals with an individual only and not with a Company or a Firm which comes within the definition of “intermediary” or “insurance intermediary”. It was argued that the renewal of a licence is, in fact, a fresh grant and the same has to be considered in terms of Regulation 9(1) of the 2002 Regulations. The regulation is not inconsistent either with Insurance Act, 1938 and IRDA Act, 1999. In this regard, the learned Advocate General has relied upon AIR 1997 SC 412 (Paras 37 to 39) (Gajraj Singh etc. Vs. The Stte Transport Appellate Tribunal & Ors etc.). The relevant observant observations of the Hon’ble Supreme Court has relied upon by the learned Advocate General is reproduced herein below:- “37. In P. Ramanatha Aiyar’s “The Law Lexicon” (Reprint Edition 1987), the word ‘renewal’ is defined at page 1107 to mean “a change of something old for something new. The renewal of a ‘licence’ means a new licence granted by way of renewal”. The renewal of a negotiable bill or note is regarded simply as a prolongation of the original contract. The office of a “renewal”, as it is termed, of a life policy, is to prevent discontinuance or forfeiture. 38. In Provash Chandra Dalui v. Biswanath Banerjee, 1989 Supp (1) SCC 487 at 496, in para 14: ( AIR 1989 SC 1834 at p. 1839) para 12, this Court drew the distinction between the meaning of the words extension and renewal. It was held that a distinction between extension and renewal is chiefly that in the case of renewal, a new lease is required while in the case of extension the same lease continues in force during additional period by the performance of stipulated act. In order words, the word ‘extension’ when used in its proper and usual sense in connection a lease, means prolongation of the lease. 39. In order words, the word ‘extension’ when used in its proper and usual sense in connection a lease, means prolongation of the lease. 39. It is settled law that grant of renewal is a fresh grant though it breaths life into the operation of the previous lease or licence granted as per existing appropriate provisions of the Act, rules or orders or acts intra vires or as per the law in operation as on the date of renewal. The right to get renewal of a permit under the Act is not a vested right but a privilege subject to fulfillment of the conditions precedent enumerated under the Act.” The said judgment was cited to show that since renewal means a fresh grant, the authority should have the same considerations as if the applicant has applied for an original licence. The application in Form A also suggests the same. It was argued that the IRDA Act is not subordinate to Insurance Act, 1938. The preamble to the IRDA Act, 1999 would make it clear that the said Act was enacted to provide for the establishment of an Authority to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto and further to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the General Insurance Business (Nationalization) Act, 1972. In fact, Insurance Act, 1938 was amended simultaneously with the coming into force of IRDA Act, 1999. It was argued that although there is no apparent consistency between the said two Acts and the Regulation framed under the IRDA Act, 1999 in case there are overlap pings, the approach of the Court would be to reconcile the provisions in order to uphold the statute. It was contended that the violation of Code of Conduct would be as much a consideration as the interest of the policyholders whose interests the regulators are required to protect in considering an application for renewal of licence. The writ petitioners have made prevaricating statements with regard to the violation of Regulation 23. It was argued that while they have admitted before the Chairman that there had been violations of Regulation 23, but in the Affidavit-in-reply, it was contended that such letters and/or communications admitting violations were not made only to buy peace. The writ petitioners have made prevaricating statements with regard to the violation of Regulation 23. It was argued that while they have admitted before the Chairman that there had been violations of Regulation 23, but in the Affidavit-in-reply, it was contended that such letters and/or communications admitting violations were not made only to buy peace. This conduct of the petitioner itself would be sufficient not to entertain the writ petitioner. The learned Advocate General relied upon the in formations that were furnished in the year 2007 by the writ petitioners in order to show that during 2003-2007 as many as 58 times, such investments in mutual funds were sourced from the insurance premium and/or claim amount and they represent 90 per cent of such amounts. The earlier representations of the petitioners would show that they were only utilizing ‘surplus’ money for investments without eroding the corpus of “IBA”. This was misleading and a clear misrepresentation. The entire purpose and object of creation of insurance bank account has been rendered nugatory by such systematic withdrawal of amounts from the insurance bank accounts which represent 90 per cent of such deposits either in the form of premium or claim which is clearly not permissible under the regulation. The petitioner as a composite broker cannot claim that they are ignorant of Regulation 23 or the manner of utilization of such amount in mutual fund and/or other investments which are clearly impermissible under said regulation. In dealing with the recommendation in the Office Note, the learned Advocate General submitted that the recommendations are by three subordinate officers, who are not authorities contemplated under the IRDA Act. The said recommendation was prepared on a date when the member (Non-life) was on tour. The member (Non-life) after returning and considering the note recommended cancellation and/or suspension if it is a serious breach. The signature of the Chairman immediately after the recommendation is not approval of a decision since the Chairman considered the observation given by member (Non-life) and thereafter had decided initially to cancel the licence. Moreover, the office notes prior to the recommendations which are contained in Page 4 to 14 of such office notes dated 28th August, 2009 are only internal guidelines. Moreover, the office notes prior to the recommendations which are contained in Page 4 to 14 of such office notes dated 28th August, 2009 are only internal guidelines. The learned Advocate General has produced before this Court the authentic office note dated 7th May, 2009 and 28th August, 2009, the observation of member (Non-life) dated 7th September, 2009 and the observation of the Chairman with regard to such Office Notes on 14th September, 2009 and is also the subsequent communication made to the Executive Director with regard to confidentiality of such guideline. It is argued that the Chairman was of the view that such guidelines are not required to be displayed in any public domain and the tabular statement as between pages 4 and 14 might be used for internal guidelines only. Such office notes and internal guidelines cannot be compared with the circulars issued by the various statutory authorities and which are in public domain. Accordingly, the decisions cited on behalf of the petitioner with regard to the binding effect of the office note has no manner of application. Internal office notes cannot be elevated to the position of a circular issued under statute and in public domain. In this regard, he has relied upon a decision reported in 2010(2)SCC 422 (Para 17) (Union of India & Anr. Vs. Kartick Chandra Mondal & Anr.). It was further argued that IRDA Act, 1999 being a later statute in case of any conflict with Insurance Act, 1938 must prevail inasmuch as regulations are being framed under both the statutes. In this regard he has relied upon 2005(2) SCC 638 (Maruti Udyog Ltd. Vs. Ram Lal & Ors.) in which it was held that if there are two special statues both containing non-obstante clauses, the later statute in time shall prevail. The concept of intermediary broker was introduced only by the IRDA Act, 1999 which has since been adopted in the Insurance Act, 1938. Moreover, licence was issued under Brokers Regulations 2002. The learned Advocate General also placed reliance upon the decision reported in AIR 1962 SC 204 (paragraphs 5,6,7,10,18 and 19) (Chandrakant Krishnarao Pradhan & Anr. Vs. The concept of intermediary broker was introduced only by the IRDA Act, 1999 which has since been adopted in the Insurance Act, 1938. Moreover, licence was issued under Brokers Regulations 2002. The learned Advocate General also placed reliance upon the decision reported in AIR 1962 SC 204 (paragraphs 5,6,7,10,18 and 19) (Chandrakant Krishnarao Pradhan & Anr. Vs. Jasjit Singh, the Collector of Customs, Bombay & Ors.) for the proposition that in interpreting such rules and regulations said regulations, the Court is required to take into consideration that the said composite brokers are in a high fiduciary position and “a person in which a high fiduciary position must, of necessity, be subjected to the strict control, and the licensing authority in holding him forth to the prospective principals as a reliable and trustworthy person, must see that persons acting on the faith of the assurance of the licence are in no way dignified.” The said regulations sub served a very salutary and necessary principle and such regulations have been framed to protect the interest of the policyholders. In Chandra Kant (supra) it was a case of cancellation of licence and dealing with the said issue, the Hon’ble Supreme Court observed that the authorities concerned must be vigilant to ensure that no contravention of the rules take place and customs authorities do not license wrong type of persons. The learned Advocate General had specifically relied upon the observation of the Hon’ble Supreme Court in Paragraph 19 where the Hon’ble Supreme Court was considering the rules controlling of licensed agent, the relevant observations of the Hon’ble Supreme Court are reproduced herein below:- “19. Lastly, it is contended that the Rules control a licensed agent in a manner which makes him an ‘unpaid servant’ of the Customs authorities. This is one way of looking at the matter. The right way to look at it is that a profession is being regulated, and the profession is one in which an agent deals with the property of another and by the law is deemed to be owner of the property. A person in such a high fiduciary position must, of necessity, be subjected to strict control, and the licensing authority in holding him forth to the prospective principals as a reliable and trustworthy person must see that persons acting on the faith of the assurance of the licence are in no way dignified. A person in such a high fiduciary position must, of necessity, be subjected to strict control, and the licensing authority in holding him forth to the prospective principals as a reliable and trustworthy person must see that persons acting on the faith of the assurance of the licence are in no way dignified. The Rules, therefore, sub serve a very salutary and necessary principle, and in our judgment are designed to advance public interest and cannot be questioned, unless a person wishes to act dishonestly and wants to avoid control. It is well known that many underhand practices are common at Custom Houses, and the Customs authorities have to be vigilant in preventing them. They must, therefore, see that they do not license the wrong type of persons; and in the interests of the Revenue and more so, in the interests of persons who employ licensed agents, these Rules have been framed. Looking at the Rules generally, we are of opinion that though they are strict, they are absolutely necessary, and their strictness would be felt only by persons, who are not otherwise honest.” It is, thus, argued that the petitioners are in fiduciary capacity as would be evident from Regulation 23 of the 2002 Regulations which clearly states that such broker shall act as the trustee of the insurance money that he is required to handle in order to discharge his function as a reinsurance broker and for the purpose of the said regulation, it would be deemed that a payment made to the reinsurance broker shall be considered as broker made to the broker. It is submitted that on 58 occasions, they have violated this trust and it is no answer that claims have been paid by the broker in terms. The broker every time withdraws money from the said “Insurance Bank Account” commits a violation which continued unabated 58 times before the Inspection Team could discover. On the aspect of judicial review of the said order, it was argued that the Writ Court in exercising such power of judicial review would be very circumspect and is not exercising an appellate power. It is argued that unless there is a patent error or an error of jurisdiction, the Writ Court should not interfere with the said order even if the Court on the basis of the stated facts disagree with the reasons given by the authority. It is argued that unless there is a patent error or an error of jurisdiction, the Writ Court should not interfere with the said order even if the Court on the basis of the stated facts disagree with the reasons given by the authority. Unless such view is patently absurd and suffers from perversity, the Court should not interfere with such decision. In this context, he has relied upon 2008(9) SCC 1 (Paragraphs 38 to 45) Shamshad Ahmad & Ors. Vs. Tilak Raj Bajaj through Lrs. & Ors.). The learned Advocate General further submitted that Section 42E was introduced in 2002 which regulates the functioning of a broker including payment or commission etc. This provision would also indicate that such regulations would be applicable in considering an application for renewal of licence. It is further argued that the petitioner cannot make out a new case which has neither been pleaded nor urged. There is no challenge to the regulations and in absence of such challenge being thrown it would not be open for the petitioner to argue that such Regulation 9(2)(I) and 14 of Brokers Regulations, 2002 would not be applicable in considering an application for renewal of licence. In this regard he has referred the following decisions:- i) AIR 1981 SC 588 (Paragraph 6) (S.S. Sharma & Ors. Vs. Union of India & Ors.) It is argued that the petitioner by referring to Reliance and other two Brokers tried to make out a case of hostile discrimination which also involves mala fide. There is no pleading in the petition to that effect inasmuch as no case was made out that the equals have been treated unequally. In referring to the order passed in such cases, it was argued that the violation are of a different kind and nature and there is no breach of trust or fiduciary duty was involved which is to be considered more serious than any other breaches. In this he has relied upon the following decisions:- i) 1987 (1) SCC 228 (Paragraphs 37 to 40) (Dr. Mahesh Madhav Gosavi Vs. Shivajirao Nilangekar Patil & Ors.) ii) 2011(12) SCC 94 (Paragraph 43) (Jaipur Development Authority & Anr. Vs. Vijay Kumar Data & Anr.) It is argued that there is no pleading or prayer in the writ petition which would show that the petitioner has challenged the Regulations 2002. Mahesh Madhav Gosavi Vs. Shivajirao Nilangekar Patil & Ors.) ii) 2011(12) SCC 94 (Paragraph 43) (Jaipur Development Authority & Anr. Vs. Vijay Kumar Data & Anr.) It is argued that there is no pleading or prayer in the writ petition which would show that the petitioner has challenged the Regulations 2002. In this regard he has relied upon following decisions:- i) 2011(6) SCC 597 (Paragraphs 17, 18) (State of Himachal Pradesh & Ors. Vs. Himachal Pradesh Nizi Vyavsayik Prishikhan Kendra Sangh) It was argued that the Court ordinarily would not pass an order directing renewal of licence. In this regard he has relied upon the following decisions:- i) AIR 1984 SC 898 (Paragraphs 14,18) (Bishnu Ram Borah & Anr. Vs. Parag Saikia & Ors.); ii) AIR 1985 SC 1108 (Paragraph 16) (State of U.P. & Anr. Vs. Raja Ram Jaiswal & Anr.) It was argued that the said licence was granted under the IRDA Act, 1999 and the regulations framed there under which would be evident from the renewed licence issued in the 2006 and in this connection he has drawn attention of this Court to Clauses 1 and 3 of the said Certificate of Renewal which are reproduced herein below:- “1. The Licence of M/s. Heritage Finance & Trust (India) Pvt. Ltd. category Composite broker is hereby renewed under section 13 of the Insurance Regulatory and Development Authority (Insurance Brokers) Regulations, 2002 and Insurance Regulatory and Development Authority Act, 1999 (4 of 1999) for the period of18/02/2006 to 17/02/2009. 2. Issued at Hyderabad on 13th day of March, Two Thousand 06 3. This licence is issued subject to the condition that the applicant shall comply with all provisions of the Insurance Act, 1938, IRDA Act, 1999, the Rules and Regulations made there under and the Guidelines, Circulars & directions issued by the Authority from time to time.” It was also contended that in refusing to renew licence, the respondents are trying to achieve what they could not have achieved directly by not being able to cancel the licence of the petitioner. It was argued that the credibility of the petitioner could not have been decided on the ground of violation of Regulation 23 in absence of any allegation of violation of Code of Conduct. The learned Advocate General was submitted that the word “shall” used in Section 42D (3) of the Insurance Act, 1938 is directory and not mandatory. It was argued that the credibility of the petitioner could not have been decided on the ground of violation of Regulation 23 in absence of any allegation of violation of Code of Conduct. The learned Advocate General was submitted that the word “shall” used in Section 42D (3) of the Insurance Act, 1938 is directory and not mandatory. It was submitted that the said section is required to be read with the other provisions of the IRDA Act and the Regulations framed there under. It was submitted that the Insurance Act was amended consequent upon the introduction of the IRDA Act, 1999 and the Regulation of 2002 was framed under the provisions of Section 114A of the Insurance Act, 1938 and Section 26 of the IRDA Act, 1999. The entire object of the Act amongst others is to protect the interest of the policyholders. In view thereof, the said Section 42D(3) is to be read harmoniously with the Brokers Regulations 2002, namely, Regulations 9 and 14. Such construction would be in keeping consonance with the provisions of the Insurance Act, IRDA Act and the Regulations framed there under and the objects the said Acts seek to achieve. It was submitted that the word “shall” has to be considered in the context it is used and in relation to the other provisions in IRDA Act and the Regulations, 2002 with regard to renewal of licence. In this regard, the learned Advocate General relied upon a decision reported in 2004 (8) SCC 402 (U.P. State Electricity Board Vs. Shiv Mohan Singh & Anr.) Paragraphs 52 and 53 in which Their Lordships observed that context, purport and object of the statute is to be ascertained that whether “shall” is to be construed as mandatory or directory. In that context, Their Lordships referred to an earlier catena of decisions and observed:- “Where a statutory functionary is asked to perform a statutory duty within the time prescribed there for, the same would be directory and not mandatory. Furthermore, a provision in a statute which is procedural in nature although employs the word ‘shall’ may not be held to be mandatory if thereby no prejudice is caused. The Court cannot supply casus om issus.” Their Lordships have further observed as follows: “A statute must be read in the text and context thereof. Furthermore, a provision in a statute which is procedural in nature although employs the word ‘shall’ may not be held to be mandatory if thereby no prejudice is caused. The Court cannot supply casus om issus.” Their Lordships have further observed as follows: “A statute must be read in the text and context thereof. Whether a statute is directory or mandatory would not be dependent on the user of the words ‘shall’ or ‘may’. Such a question must be posed and answered having regard to the purpose and object it seeks to achieve. The construction of a statute will depend on the purport and object for which the same had been used.” On the aspect of the interpretation of Section 42D(3) of the Insurance Act, 1938 it is argued that having regard to the other provisions under the IRDA Act and the regulations framed there under including Section 42E of the Insurance Act, 1938 which was introduced simultaneously with the Regulations 2002, the word ‘shall’ mentioned in Section 42D(3) of the Insurance Act, 1938 with regard to the withdrawal of licence is required to be construed as directory and not mandatory. This interpretation would be in consonance with the other provisions of the Act and would advance the object of the said Act. The learned Advocate General argued that it is not possible from the reading of the balance-sheet to ascertain as to the source of such investments and if it were arising out any insurance surplus meaning thereby profits earned out of the business. It is not possible to decipher from the said accounts that such amounts were sourced from the “IBA”. Mr. Saktinath Mukherjee, the learned Senior Counsel in dealing with contention of the learned Advocate General submitted that the Chairman has completely ignored that in the annual returns filed in compliance with Regulation 25 of the 2002 Regulations, the petitioners have specifically in the balance-sheet mentioned investments in mutual funds and particulars of such investments were indicated in Schedule 4 to such balance-sheet. The petitioner is only engaged in the insurance broking business as a composite broker in terms of the licence granted by the petitioner and, accordingly, there is no question of the petitioner carrying on any other business or the utilization of the funds could be from any other source. The petitioner is only engaged in the insurance broking business as a composite broker in terms of the licence granted by the petitioner and, accordingly, there is no question of the petitioner carrying on any other business or the utilization of the funds could be from any other source. Such moneys were utilized from the bank account and there is no question o the respondent authorities having any doubt that such investments were made out from insurance profit and/or surplus amount. The challenge to the said impugned decisions are, thus, on the ground of arbitrariness and hostile discrimination apart from disproportionality of punishment. Mr. Mukherjee in order to show the arbitrariness of the impugned order submitted that:- “(a) The violation of Regulation 23 was remedied by March 2008 during validity of licence. (b) The licence continued to be valid and operative by reason of Regulation 15 during pendency of renewal application made on 31.12.2008 though the licence period in terms of Regulations 12 expired on 17.2.2009. (c) The respondents in any case were in full knowledge of the said violation after inspection between August 27 and 31, 2007 the findings whereof were communicated to the petitioner by the letter dated 25.1.2008. (d) No action was taken for suspension or cancellation of licence under Regulation 35 though it has been argued that the petitioner violated Code of Conduct and committed breach of trust by making investments in mutual funds from insurance bank account. (e) On the other hand the show cause notice dated 20.4.2010 issued for proceedings for cancellation of licence was withdrawn as recorded in the Order dated 20.05.2010.” In dealing with the contention of the respondents that Section 42D(3) of the Insurance Act read with Section 42(4)(b)(c)(d)(e) and (f) is not the only law governing renewal of licence and recourse has to be taken to Section 14(2)(c) and Section 26(2)(e) of the IRDA Act as well as the Code of Conduct in Schedule III to the Brokers Regulations, 2002. It was argued that the said contention is untenable in law in view of the following reasons:- (a) Under Regulation 12 though the licence has validity for 3 years the same continues to be operative even after expiry of the period of 3 years by reason of Regulation 15 until the time the renewal is refused in terms of Regulation 14 or the licence is cancelled or suspended under Regulation 36 after following the procedure prescribed under Regulations 37 and 38. (b) Regulations have been framed under Section 114A of the Insurance Act. Both Section 42D in its entirety and Section 114A were introduced in the Insurance Act by IRDA Act, 1999. (c) The definition of Intermediary was there in 1999 under Section 2(1)(f) of IRDA Act. (f) Based on renewal application dated 12.01.2006 and documents furnished therewith and clarifications further information and documents sought in connection therewith, respondents renewed licence of the petitioner for three years from 18.02.2006. No objection whatsoever raised regarding investment in Mutual Funds (g) Petitioner regularly filed half year unaudited financial statements and yearly audited financial statements in compliance of Regulation 26 and Regulation 25 of the Brokers Regulations, wherefrom investment in mutual funds of reinsurance premiums/claims pending for payment could be easily ascertained. Respondent authorities have requisite expertise to do so. It was submitted that the acts of the respondents would clearly show that violation of Regulation 23 did not warrant cancellation or suspension of licence. In this regard, Mr. Mukherjee has relied upon the following events:- “(i) Though violation of Regulation 23 was noticed for the first time, according to respondents upon inspection in August, 2007, the findings were communicated only after nearly 5 months vide letter dated 25.01.2008. (ii) Petitioner submitted reply vide letter dated 26.02.2008 and thereafter for a period of nearly 15 months the respondents remained silent. (iii) Respondents did not communicate any measures to be taken by the petitioner, as per Regulation 32(2). (iv) Respondents thereafter sought information by letter dated 12.05.2009, which were furnished by the petitioner vide letter dated 20.05.2009 and again for nearly 5 months there was no communication from respondents. (v) Respondents issued Notice to Show Cause dated 12.10.2009. In said Show Cause Notice too there was no threat of cancellation or suspension of licence. (vi) The said show cause notice dated 12.10.2009 was replied on 23.10.2009, followed by personal hearing on 15.12.2009. (v) Respondents issued Notice to Show Cause dated 12.10.2009. In said Show Cause Notice too there was no threat of cancellation or suspension of licence. (vi) The said show cause notice dated 12.10.2009 was replied on 23.10.2009, followed by personal hearing on 15.12.2009. (vii) After a gap of almost two months, Respondents sought further information vide letter dated 05.02.2010, which were furnished by the petitioner vide letter dated 22.02.2010. (viii) After gap of nearly 2 months show cause notice dated 20.4.2010 was issued for cancellation of licence under Regulation 34 which was later withdrawn as recorded in order dated 20.05.2010 passed in WP (W) No.9497 of 2010. This was despite note of Member (Non life) in Office Note dated 28.8.2009 that if violation of Regulation 23 is serious in nature involving sizeable amounts, suspension/cancellation under Regulation 34 may be considered.” The Court is inclined to accept the submission of the learned Advocate General. In order to appreciate the submission of the respective Counsels, the following provisions of the Insurance Act, 1938, IRDA Act, 1999 and Brokers Regulations, 2002 are reproduced herein below:- The Insurance Act, 1938 S.42. Licensing of insurance agents. – (1) The Authority or an officer authorized by it in this behalf shall, in the manner determined by the regulations made by it and on payment of the fee determined by the regulations, which shall not be more than two hundred and fifty rupees, issue to any person making an application in the manner determined by the regulations, a licence to act as an insurance agent for the purpose of soliciting or procuring insurance business: Provided that, - (i) in the case of an individual, he does not suffer from any of the disqualifications mentioned in sub-section (4); and (ii) in the case of a company or firm, any of its directors or partners does not suffer from any of the said disqualifications: Provided further that any licence issued immediately before the commencement of the Insurance Regulatory and Development Authority Act, 1999 shall be deemed to have been issued in accordance with the regulations which provide for such licence. (2) A licence issued under this section shall entitle the holder to act as an insurance agent for any insurer. (2) A licence issued under this section shall entitle the holder to act as an insurance agent for any insurer. (3) A licence issued under this section, after the date of the commencement of the Insurance Regulatory and Development Authority Act, 1999, shall remain in force for a period of three years only from the date of issue, but shall, if the applicant, being an individual does not, or being a company or firm any of its directors or partners does not, suffer from any of the disqualifications mentioned in clauses (b), (c), (d), (3), (ea) and (f) of subsection (4) and the application for renewal of licence reaches the issuing authority at least thirty days before the date on which the licence ceases to remain in force, be renewed for a period of three years at any one time on payment of the fee determined by the regulations made by the Authority which shall not be more than rupees two hundred and fifty, and additional fee of an amount determined by the regulations not exceeding rupees one hundred by way of penalty, if the application for renewal of the licence does not reach the issuing authority at least thirty days before the date on which the licence ceases to remain in force. (3A) No application for the renewal of a licence under this section shall be entertained if the application does not reach the issuing authority before the licence ceases to remain in force: Provided that the Authority may, if satisfied that undue hardship would be caused otherwise, accept any application in contravention of this sub-section on payment by the applicant of a penalty of seven hundred and fifty rupees. (4) The disqualifications above referred to shall be the following:- (a) that the person is a minor; (b) that he is found to be of unsound mind by a court of competent jurisdiction; (c) that he has been found guilty of criminal misappropriation or criminal breach of trust or cheating or forgery or an abetment of or attempt to commit any such offence by a court of competent jurisdiction: Provided that where at least five years have elapsed since the completion of the sentence imposed on any person in respect of any such offence, the Authority shall ordinarily declare in respect of such person that his conviction shall cease to operate as a disqualification under this clause; (d) that in the course of any judicial proceeding relating to any policy of insurance or the winding up of an insurance company or in the course of an investigation of the affairs of an insurer it has been found that he has been guilty of or has knowingly participated in or connived at any fraud, dishonesty or misrepresentation against an insurer or an insured. (e) That in the case of an individual, he does not possess the requisite qualifications and practical training for a period not exceeding twelve months, as may be specified by the regulations made by the Authority in this behalf; (ea) that in the case of a company or firm making an application under sub-section (a) or sub-section (3), a director or a partner or one or more of its officers or other employees so designated by it and in the case of any other person, the chief executive, by whatever name called, or one or more of his employees designated by him do not possess the requisite qualifications and practical training and have not passed such an examination as required under clauses (e) and (f); (f) that he has not passed such examination as may be specified by the regulations made by the Authority in this behalf; Provided that a person who had been issued a licence under sub-section (1) of this section or sub-section (1) of Section 64UM shall not be required to possess the requisite qualifications, practical training and pass such examination as required by Clauses (e) and (f); (g) that he violates the code of conduct as may be specified by the regulations made by the Authority. (5) If it be found that an insurance agent being an individual is, or being or company or firm contains a director or partner who is suffering from any of the disqualifications mentioned in subsection (4), then, without prejudice to any other penalty to which he may be liable, the Authority shall, and if the insurance agent has knowingly contravened any of the provisions of this Act may, cancel the licence issued to the agent under this section. (6) The Authority may issue a duplicate licence to replace a licence lost, destroyed or mutilated, on payment of such fee not exceeding fifty rupees as may be determined by the regulations. (7) Any person who acts as an insurance agent without holding a licence issued under this section to act as such shall be punishable with fine which may extend to five hundred rupees, and any insurer or any person acting on behalf of an insurer, who appoints as an insurance agent any person not licensed to act as such or transacts any insurance business in India through any such person, shall be punishable with fine which may extend to one thousand rupees. (8) Where the person contravening sub-section (7) is a company or a firm, then, without prejudice to any other proceedings which may be taken against the company or firm, every director, manager, secretary or other officer of the company, and every partner of the firm who is knowingly a party to such contravention shall be punishable with fine which may extend to five thousand rupees. (1) The Authority or an officer authorized by it in this behalf shall, in the manner S.42D. Issue of licence to intermediary or insurance intermediary. – determined by the regulations made by the Authority and on payment of the fees determined by the regulations made by the Authority, issue to any person making an application in the manner determined by the regulations, and no suffering from any of the disqualifications herein mentioned, a licence to act as an intermediary or an insurance intermediary under this Act: Provided that – (a) in the case of an individual, he does not suffer from any of the disqualifications mentioned in sub-section (4) of Section 42, or (b) in the case of a company, or firm, any of its directors or partners does not suffer from any of the said disqualifications. (2) A licence issued under this section shall entitle the holder thereof to act as an intermediary or insurance intermediary. (3) A licence issued under this section shall remain in force for a period of three years only from the date of issue, but shall, if the applicant, being an individual does not, or being a company or firm any of its directors or partners does not suffer from any of the disqualifications mentioned in clauses (b), (c), (d), (e) and (f) of sub-section (4) of Section 42 and the application for renewal of licence reaches the issuing authority at least thirty days before the date on which the licence ceases to remain in force, be renewed for a period of three years at any one time on payment of the fee, determined by the regulations, made by the Authority and additional fee for an amount determined by the regulations, not exceeding one hundred rupees by way of penalty, if the application for renewal of the licence does not reach the issuing authority at least thirty days before the date on which the licence ceases to remain in force. (4) No application for the renewal of a licence under this section shall be entertained if the application does not reach the issuing authority before the licence ceases to remain in force: Provided that the Authority may, if satisfied that undue hardship would be caused otherwise, accept any application in contravention of this sub-section on payment by the application of a penalty of seven hundred and fifty rupees. (5) The disqualifications above referred to shall be the following:- (a) that the person is a minor; (b) that he is found to be of unsound mind by a court of competent jurisdiction; (c) that he has been found guilty of criminal misappropriation or criminal breach of trust or cheating or forgery or an abetment of or attempt to commit any such offence by a court of competent jurisdiction: Provided that, where at least five years have elapsed since the completion of the sentence imposed on any person in respect of any such offence, the Authority shall ordinarily declare in respect of such person that his conviction shall cease to operate as a disqualification under this clause; (d) that in the course of any judicial proceeding relating to any policy of insurance of the winding up of an insurance company or in the course of an investigation of the affairs of an insurer it has been found that he has been guilty of or has been knowingly participated in or connived at any fraud dishonestly or misrepresentation against an insurer or an insured; (e) that he does not possess the requisite qualifications and practical training for a period not exceeding twelve months, as may be specified by the regulations made by the Authority in this behalf; (f) that he has not passed such examinations as may be specified by the regulations made by the Authority in this behalf; (g) that he violates the code of conduct as may be specified by the regulations made by the Authority. (6) If it be found that an intermediary or an insurance intermediary suffers from any of the foregoing disqualifications, without prejudice to any other penalty to which he may be liable, the Authority shall, and if the intermediary or an insurance intermediary has knowingly contravened any provision of this Act may cancel the licence issued to the intermediary or insurance intermediary under this section. (7) The Authority may issue a duplicate licence to replace a licence lost, destroyed or mutilated, on payment of such fee, as may be determined by the regulations made by the Authority. (7) The Authority may issue a duplicate licence to replace a licence lost, destroyed or mutilated, on payment of such fee, as may be determined by the regulations made by the Authority. (8) Any person who acts as an intermediary or an insurance intermediary without holding a licence issued under this section to act as such, shall be punishable with fine, and any insurer or any person who appoints as an intermediary or an insurance intermediary or any person not licensed to act as such or transacts any insurance business in Indian through any such person, shall be punishable with fine. (9) Where the person contravening sub-section (8) is a company or a firm, then, without prejudice to any other proceedings which may be taken against the company or firm, every director, manager, secretary or other officer of the company, and every partner of the firm who is knowingly a party to such contravention shall be punishable with fine. The IRDA Act, 1999 S.14. Duties, powers and functions of Authority. – (1) Subject to the provisions of this Act any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and reinsurance business. (2) Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include, - (a) issue of the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration; S.26. Power to make regulations. – (1) The Authority may, in consultation with the Insurance Advisory Committee, by notification, make regulations consistent with this Act and the rules made there under to carry out the purposes of this Act. Power to make regulations. – (1) The Authority may, in consultation with the Insurance Advisory Committee, by notification, make regulations consistent with this Act and the rules made there under to carry out the purposes of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters, namely:- (a) the time and places of meetings of the Authority and the procedure to be followed at such meetings including the quorum necessary for the transaction of business under sub-section (1) of section 10; (b) the transaction of business at its meetings under subsection (4) of section 10; (c) the terms and other conditions of service of officers and other employees of the Authority under sub-section (2) of section 12; (d) the powers and functions which may be delegated to Committees of the members under sub-section (2) of section 23; and (e) any other matter which is required to be, or may be, specified by regulations or in respect of which provision is to be or may be made by regulations. The IRDA (Insurance Brokers) Regulations, 2002 Regn.9. Consideration of application. – (1) The Authority while considering an application for grant of a licence shall take into account, all matters relevant to the carrying out of the functions by the insurance broker. (2) Without prejudice to the above, the Authority in particular, shall take into account the following, namely:- (A) whether the applicant is not suffering from any of the disqualifications specified under sub-section (5) of section 42D of the Act; (B) whether the applicant has the necessary infrastructure, such as, adequate office space, equipment and trained manpower to effectively discharge his activities; (C) whether the applicant has in his employment a minimum of two persons who have the necessary qualifications specified in clause (F) below and experience to conduct the business of insurance broker; (D) whether any person, directly or indirectly connected with the applicant, has been refused in the past the grant of a licence by the Authority. Explanation. – For the purposes of this sub-clause, the expression “direction or indirectly connected” means a relative in the case of an individual, and in the case of a firm or a company or a body corporate, an associate, a subsidiary, an interconnected undertaking or a group company of the applicant. Explanation. – For the purposes of this sub-clause, the expression “direction or indirectly connected” means a relative in the case of an individual, and in the case of a firm or a company or a body corporate, an associate, a subsidiary, an interconnected undertaking or a group company of the applicant. It is hereby clarified that these terms shall have the same meanings as ascribed to them in the Companies Act, 1956 (1 of 1956) or MRTP Act, 1969 (54 of 1969), as the case may be; (E) whether the applicant fulfils the capital requirements as specified in regulation 10 and deposit requirements as specified in regulation 22; (F) whether the principal officer of the applicant – (i) possesses the minimum qualification of: (a) Bachelors/Masters degree in Arts, Science, or Social Sciences or Commerce or its equivalent from any institution/university recognized by any State Government or the Central Government; or (b) Bachelor’s degree in engineering or its equivalent from any institution/university recognized by any State Government or the Central Government; or (c) Bachelor’s degree in law or its equivalent from any institution/university recognized by any State Government or the Central Government; or (d) Masters in Business Administration or its equivalent from any institution/university recognized by any State Government or the Central Government; or (e) Associate/Fellow of the insurance Institute of India, Mumbai; or (f) Associate/Fellow of the Institute of Risk Management, Mumbai; or (g) Any post graduate qualification of the Institute of Insurance and Risk Management, Hyderabad; or (h) Associate/Fellow of the Institute of Chartered Accountants of India, New Delhi; or (i) Associate/Fellow of the Institute of Cost and Works Accountants of India, Kolkata; or (j) Associate/Fellow of the Institute of Company Secretaries of India, New Delhi; or (k) Associate/Fellow of the Actuarial Society of India; or (l) Certified Associate ship of the Indian Institute of Bankers, Mumbai; or (m) Any other qualification specified from time to time by the Authority under these regulations; and (ii) the principal officer of the applicant has received at least one hundred hours of theoretical and practical training from an institution recognized by the Authority from time to time: Provided that where the principal officer of the applicant: (a) has been carrying on reinsurance related activity or insurance consultancy for a continuous period of seven years, preceding the year in which such an application is made; or (b) has for a period of, not less than seven years prior to the application made to the Authority has been a principal underwriter or has held the position of a Manager in any one of the nationalized insurance companies in India; or (c) is an Associate/Fellow of the Insurance Institute of India, Mumbai; or Associate/Fellow of the Institute of Risk Management, Mumbai; or Associate/Fellow of the Actuarial Society of India; or any post graduate qualification of the Institute of Insurance and Risk Management, Hyderabad, the theoretical and practical training from an institution recognized by the authority from time to time according to a syllabus approved by the authority shall be fifty hours; (iii) has passed an examination, at the end of the period of training mentioned in the proviso above, conducted by the National Insurance Academy, Pune or any other examining body recognized by the Authority; (G) whether the principal officer has not violated the code of conduct as specified in Schedule III to these regulations; (H) that the applicant is not engaged in any other business other than the main objects of the applicant; and (I) the Authority is of the opinion that the grant of licence will be in the interest of policyholders. Exception. – In the case of applications made to the Authority immediately following the notification of these regulations, the requirements under sub-regulation (2)(C) shall stand modified to the extent that instead of two qualified persons mentioned in the requirement be scaled down to one person, who should have qualified himself at the latest by the time of the grant of a licence under these regulations. This exception may be available only to applications made to the authority upto 31st March, 2003. .(3) Any employee responsible for soliciting and procuring insurance business on behalf of an insurance broker shall also have to fulfil the requirements mentioned in su-regulations (1) and (2) above and a list of such employees need to be provided to the Authority and acknowledged by it. Regn.13. Renewal of licence. – (1) An insurance broker may, within thirty days before the expiry of the licence, make an application in Form A to the Authority for renewal of licence: Provided however that if the application reaches the Authority later than that period but before the actual expiry of the current licence, an additional fee of rupees one hundred only shall be payable by the applicant to the Authority: Provided further that the Authority may for sufficient reasons offered in writing by the applicant for a delay not covered by the previous proviso, accept an application for renewal after the date of the expiry of the licence on a payment of an additional fee of seven hundred and fifty rupees only by the applicant. (2) An insurance broker before seeking a renewal of licence, shall have completed, at least twenty-five hours of theoretical and practical training, imparted by an institution recognized by the Authority from time to time. (3) The application for a renewal, under sub-regulation (1) shall be dealt with in the same manner as is specified under regulation 9. (4) The Authority, on being satisfied that the applicant fulfils all the conditions specified for a renewal of the licence, shall renew the licence in Form B for a period of three years and send an intimation to that effect to the applicant. (5) An insurance broker licensed under these regulations for a specified category may also apply for the grant of a licence by the Authority for any other category by fulfilling the requirements of these regulations. (5) An insurance broker licensed under these regulations for a specified category may also apply for the grant of a licence by the Authority for any other category by fulfilling the requirements of these regulations. However, such application shall be made only after a lapse of one year from the grant of a licence in the first instance. Regn.14. Procedure where a licence is not granted. – (1) Where an application for grant of a licence under regulation 6 or of a renewal thereof under regulation 13, does not satisfy the conditions set out in regulation 9, the Authority may refuse to grant the licence: Provided that no application shall be rejected unless the applicant has been given a reasonable opportunity of being heard. (2) The refusal to grant a licence shall be communicated by the Authority within thirty days of such refusal to the applicant stating therein the grounds on which the application has been rejected. (3) Any applicant, if aggrieved by the decision of the Authority, may apply within a period of thirty days from the date of receipt of such intimation, to the chairman of the Authority for a reconsideration of its decision. (4) The Chairman of the Authority shall consider such an application and communicate his decision thereon to the applicant in writing within six weeks of the receipt thereof.” (2) In the case of reinsurance contracts, it may be agreed between the parties specifically or as part of international market practices that the licensed reinsurance broker or composite broker can collect the premium and remit to the reinsurer and/or collect the claims due from the reinsures to be passed on to the insured. In these circumstances the money collected by the licensed insurance broker shall be dealt with in the following manner: (a) he shall act as the trustee of the insurance money that he is required to handle in order to discharge his function as a reinsurance broker and for the purposes of his regulation it shall be deemed that a payment made to the reinsurance broker shall be considered as payment made to the reinsurer; (b) ensure that “insurance money” is held in an “Insurance Bank Account” with one or more of the scheduled banks or with such other institutions as may be approved by the Authority; (c) give written notice to, and receive written confirmation from, a bank, or other institution that he is not entitled to combine the account with any other account, or to exercise any right of set-off, charge or lien against money in that account; (d) ensure that all monies received from or on behalf of an insured is paid into the “Insurance Bank Account” which remains in the “Insurance Bank Account” to remain in deposit until it is transferred on to the rein surer or to the direct insurer; (e) ensure that any refund of premium which may become due to a direct insurer on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the rein surer directly to the direct insurer; (f) Interest on recover/payment received shall be for the benefit of the direct insurer or rein surer; (g) Only remove from the “Insurance Bank Account” charges, fees or commission earned and interest received from any funds comprising the account; (h) Take immediate steps to restore the required position if at any time he becomes aware of any deficiency in the required “segregated amount”.” Regn. 23. Segregation of Insurance money. – (1) The provisions of Section 64VB of the Act shall continue to determine the question of assumption of risk by an insurer. The IRDA Act, 1999 was enacted in order to ensure that the Insurance Industry is under a Regulatory Authority. 23. Segregation of Insurance money. – (1) The provisions of Section 64VB of the Act shall continue to determine the question of assumption of risk by an insurer. The IRDA Act, 1999 was enacted in order to ensure that the Insurance Industry is under a Regulatory Authority. In the Statement of Objects and Reasons it was observed that the Insurance Act, 1938 provides for the institution of the Controller of Insurance to act as a strong and powerful supervisory and regulatory authority with powers to direct, advise, caution, prohibit, investigate, inspect, prosecute, search, seize, fine, amalgamate, authorize, register and liquidate insurance companies. However, after the nationalization of the life insurance industry in 1956 and the general insurance industry in 1972, the role of the Controller of Insurance diminished in significance over a period of time. In April, 1993, the Government set up a high-powered committee headed by Shri R.N. Malhotra, former Governor, Reserve Bank of India, to examine the structure of the insurance industry and recommend changes to make it more efficient and competitive keeping in view the structural changes in other parts the financial system of the economy. The Committee which submitted its report on 7th January, 1994 felt that the insurance regulatory apparatus should be activated even in the present set up of nationalized insurance sector and recommended, inter alia, the establishment of a strong and effective Insurance Regulatory Authority (IRA) in the form of a statutory autonomous board on the lines of Securities and Exchange Board of India. The recommendations of the Committee were discussed at different forums including the Consultative Committee of the Parliament attached to the Ministry of Finance, managements of Life Insurance Corporation, General Insurance Corporation and its subsidiary companies, trade unions, Chambers of Commerce and consumer interest groups. The recommendation to set up an autonomous Insurance Regulatory Authority found wide support. In view of the general support received, the then Government decided to bring in a legislation to establish an independent regulatory authority for the insurance industry. Since enacting legislation for creating the Insurance Regulatory Authority would take time, the then Government constituted through a Government resolution an Interim Insurance Regulatory Authority pending the enactment of a comprehensive legislation. The Chairman, Insurance Regulatory Authority has been notified as Controller of Insurance under the Insurance Act, 1938. Since enacting legislation for creating the Insurance Regulatory Authority would take time, the then Government constituted through a Government resolution an Interim Insurance Regulatory Authority pending the enactment of a comprehensive legislation. The Chairman, Insurance Regulatory Authority has been notified as Controller of Insurance under the Insurance Act, 1938. The said Interim Regulatory Authority functioned for sometime and was discharging certain functions and exercising powers of the Controller. In the main text of the Bill, provisions were incorporated to give a statutory character to the Interim Insurance Regulatory Authority and the Three Schedules incorporated which contained amendments to the Insurance Act, 1938, amendment to the Life Insurance Corporation Act, 1956, the General Insurance Business (Nationalization) Act, 1972. The relevant portion of the Statement and Object of IRDA Act, 1999 are mentioned herein below:- “The proposed Authority shall be a body corporate having perpetual succession and a common seal with power to acquire, hold and dispose of property and to contract. It will consist of a Chairperson and other members not exceeding nine in number, of whom not more than five shall serve full time, to be appointed by the Central Government from amongst persons of ability, integrity and standing who have knowledge or experience of life insurance, general insurance, actuarial science, finance economics, law, accountancy, administration or any other discipline which in the opinion of the Central Government shall be useful to the Authority. The duties, powers and functions of Authority, inter alia, shall include- (a) issue to the applicant a certificate of registration, to renew, modify, withdraw, suspend or cancel such registration; (b) protection of the interests of the policy-holders in matters concerning assigning of policy, nomination by policy-holders, insurable interest, settlement of insurance claim, surrender value of policy, and other terms and conditions of contracts of insurance; (c) specifying requisite qualifications and practical training for insurance intermediaries and agents; (d) specifying the code of conduct for surveyors and loss assessors; (e) promoting efficiency in the conduct of insurance business; (f) promoting and regulating professional organizations connected with the insurance and reinsurance business; (g) levying fees and other charges for carrying out the purposes of this Act; (h) calling for information from, undertaking inspection of, conducting enquires and investigations including audit of the insurers, insurance intermediaries and other organizations connected with the insurance business; (i) control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under Section 64U of the Insurance Act, 1938; (j) specifying the form and manner in which books of account shall be maintained and statement of accounts will be rendered by insurers and insurance intermediaries; (k) regulating investment of funds by insurance companies; (l) regulating maintenance of margin of solvency; (m) adjudication of disputes between insurers and intermediaries or insurance intermediaries; (n) supervising the functioning of the Tariff Advisory Committee; (o) specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organizations referred to in clause (f); (p) specifying percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector; and (q) exercising such other powers as may be prescribed. The powers and functions mentioned above would enable the Authority to perform the role of an effective watchdog and regulatory for the insurance sector in India. To enable the Authority to function in a truly independent manner and discharge its assigned responsibilities effectively, it is proposed to vest the Authority with statutory status. The First Schedule contains consequential provisions relating to amendments to the Insurance Act, 1938 to update certain outdated provisions and for smooth and efficient regulation of the opened up sector. To enable the Authority to function in a truly independent manner and discharge its assigned responsibilities effectively, it is proposed to vest the Authority with statutory status. The First Schedule contains consequential provisions relating to amendments to the Insurance Act, 1938 to update certain outdated provisions and for smooth and efficient regulation of the opened up sector. The Second and Third Schedules contain amendment to the Life Insurance Corporation Act, 1956 and the General Insurance Business (Nationalization) Act, 1972 respectively to remove the exclusive privilege of the nationalized companies to transact insurance business. The Bill seeks to achieve the above objects.” It would be, thus, seen that the authority was required to perform the role of an effective watchdog and regulatory. The various provisions of the Insurance Act, 1938 and the regulations framed there under are required to be read and understood in the aforesaid context. In such a situation, the nature, object and scheme of the enabling Act, the power conferred under the Rule, the concept of purposive construction and the discretion vested in the delegated bodies are required to be considered. It is not being argued by Mr. Mukherjee that Regulation 9 is ultra vires. Mr. Mukherjee on the other hand, wants to give an interpretation which if accepted would make the said regulation nugatory. The basic purpose of Regulation 9 would pale into insignificance and lost in the horizon. If the object and scheme of both the acts are scrutinized, the importance of Regulation 9 can well be appreciated. The object and scheme of both the acts would clearly suggest that such regulations are required in order to achieve the object of both the Acts. The Regulations were framed in 2002 and the Preamble to the said Regulation makes it clear that such Regulations have been framed with a view to achieve the object of both the Acts. The law should serve the public interest. The said two enactments are for the benefit of the policyholders. The Court while considering in relation to the facts of the instant case, which of the opposing constructions of the enactment would give effect to the legislative intention should presume that the legislator intended to observe this principle. It should, therefore, strive to avoid adopting a construction which is in any way adverse to the interest of the policyholders. The Court while considering in relation to the facts of the instant case, which of the opposing constructions of the enactment would give effect to the legislative intention should presume that the legislator intended to observe this principle. It should, therefore, strive to avoid adopting a construction which is in any way adverse to the interest of the policyholders. The same consideration should also apply in advancing the object of the said two legislations even if it may appear that there could be a possibility of conflict. The rule of construction as held by the Hon’ble Supreme Court in Venkataramana Devaru V. State of Mysore (AIR 1958 SC 225) is well-settled that when there are in an enactment two provisions which cannot be reconciled with each other, they should be so interpreted that, if possible, effect should be given to both. This is what is known as the rule of harmonious construction. That, effect should be given to both, is the very essence of the rule. Thus a construction that reduces one of the provisions to a “useless lumber” or “dead letter” is not harmonious construction. The harmonise is not to destroy. A familiar approach in all such cases is to find out which of the two apparently conflicting provisions is more general and which is more specific and to construe the more general one as to exclude the more specific. The question as to the relative nature of the provisions general or special has to be determined with reference to the area and extent of their application either generally or specially in particular situations. Both the Acts are the central statutes. The Endeavour of the Court in interpreting statutory provisions which may be found in two different statutes with some overlapping effect is to find out which one of the two statutes is a later statute and the purpose and object of the said statute. Section 42D(3), Section 114A of the Insurance Act, 1938 read with Sections 14 and 26 of the IRDA Act, 1999 and the regulations framed under the 1999 Act if read as a whole would support the interpretation given to the said sections by learned Advocate General. There is no apparent conflict between the statutes. When Section 42D(3) was introduced, there was no regulation framed under Section 114A of the Insurance Act, 1938 or Section 26 of the IRDA Act, 1999. There is no apparent conflict between the statutes. When Section 42D(3) was introduced, there was no regulation framed under Section 114A of the Insurance Act, 1938 or Section 26 of the IRDA Act, 1999. Although, Section 114A contemplates framing of a regulation consistent with the provisions of the Insurance Act, 1938 and the rules framed there under to carry out the purposes of the Act. The regulations were framed only in 2002 under the provisions of both the statutes, namely, the Insurance Act, 1938 and IRDA Act, 1999. Regulations 2002 was framed by taking into consideration the provisions of both the statutes. The preamble to the said regulations makes it clear. While Section 114A does not contemplate any consultation with the Insurance Advisory Committee, Regulation 23 of the IRDA Act does and it was upon such consultation, said regulations were framed. The licence was granted on the basis of the 2002 Regulations. All matters concerning suspension, cancellation, renewal, etc., of such licence are to be governed by the said statute read with the regulations. It has to be kept in mind that IRDA Act is a special statute by which an authority was created to regulate the business of insurance in an orderly manner. The IRDA Act, 1999 and Regulations, 2002 contain elaborate provisions to protect the interest of the policyholders. IRDA Act has, in fact, amended the Insurance Act, 1938. It is a regulatory statute. The said provisions Regulatory Authority applied keeping in mind the purpose and object of the said Act. It would be absurd to suggest that if a ground is available for cancellation of a licence, the same could not form the basis of refusing to renew a licence. The Regulatory Authority has to act with responsibility and cautiously in matters relating to issuance and/or renewal of such licence. On the face of the violation which is as many as 58 times, it cannot be said that any formation of opinion that it would not be in the interest of the policy-holders or that such licence should not be renewed in view of the violation of Code of Conduct is not a reasonable view which is capable of being taken in such facts and circumstances. It is true that internal guidelines indicate the procedure that are required to be followed in such matters in absence of any defined procedure but even on the basis of such guidelines it cannot be said that the decision is perverse. The petitioners had removed sizeable amounts from the “IBA” in contravention of Regulation 23. It is, however, desirable that the Regulatory Authority comes up with a guideline which can be displayed in the public domain. In fact, member (Non-life) also suggested that such guidelines should be displayed in the public domain to ensure transparency. The Chairman while considering the office notes, did not ignore such internal guidelines all together. It appears that the Chairman considered the enormity of the violation both in terms of money and the number of occasions and formed an opinion. The said decision is informed with reason which could have been arrived at on the basis of the materials on record. After all, the breach of trust cannot be ruled out. It cannot be said that the said Chairman has applied any wrong principle to consider the matter that demanded consideration or there is an error of law apparent on the face of order. On a true and proper construction of the various provisions of the Act, this Court is of the view that in considering an application for renewal, it was open for the authority concerned to consider requirements and conditions stipulated in Regulation 9 and 14 of the Brokers Regulations 2002 since any other interpretation would lead to absurdity and would be inconsistent with the purpose and object of the said Act. In any event IRDA Act, 1999 and Regulations, 2002 are to be read in harmony with Insurance Act, 1938 in order to effectuate the object of both the Acts. The Hon’ble Supreme Court has recently applied such principle in Sahara India Real Estate Corpn. Ltd. Vs. SEBI reported at 2013 (1) SCC 1 while considering, inter alia, the power of SEBI to exercise its jurisdiction under Sections 11(1), 11(4), 11-A(1) (b) and 11-B of the SEBI Act and Regulation 107 of the 2009 ICDR over public companies who have issued shares or debentures to fifty or more, but have not complied with the provision of Section 73(1) of the Companies Act by not listing its securities on a recognized stock exchange. Bennion on Statutory Interpretation, 5th Edition, dealing with the concept of absurdity which means contrary to sense and reason observed as follows:- “(1) The Court seeks to avoid a construction that produces an absurd result, since this is unlikely to have been intended by Parliament. Here the courts give a very wide meaning to the concept of ‘absurdity’, using it to include virtually any result which is unworkable or impracticable, inconvenient, anomalous or illogical, futile or pointless, artificial, or productive of a disproportionate counter-mischief. (2) In rare cases there are overriding reasons for applying a construction that produces an absurd result, for example where it appears that Parliament really intended it or the literal meaning is too strong.” “Cross, noting the wide use by the courts of the concept of absurdity, went so far as to suggest that such words as ‘repugnancy’, ‘inconsistency’, ‘anomaly’ and ‘contradiction’ can all be ‘properly subsumed under the word “absurdity” for the purposes of a brief exposition of the rules of statutory interpretation. Certainly there are dicta supporting this view. However, repugnancy, inconsistency and contradiction (all as between different enactments) raise conceptual problems different to those where the ‘absurdity’ lies within a single provision. Certain matters falling within the wide meaning of ‘absurdity’ may be caused by factors coming into existence after the passing of the enactment in question. This can then give rise to a change in the legal meaning of the enactment.” Lord Steyn while dealing with the concept of purposive construction said:- “No explanation for resorting to a purposive construction is necessary. One can confidently assume that Parliament intends its legislation to be interpreted not in the way of a black-letter lawyer, but in a meaningful and purposeful way giving effect to the basic objectives of the legislation.” (A-G’s Reference (No.5 of 20002) (2004) UKHL 40, (2004) 4 All ER 901 at (31). “The Court is required to apply a strained meaning where the literal meaning is not in accordance with the legislative purpose which is oftenly called a purposive-and-strained construction. That is why the power of the courts at times is to disregard the literal meaning of an Act and to give it a purposive construction. “The Court is required to apply a strained meaning where the literal meaning is not in accordance with the legislative purpose which is oftenly called a purposive-and-strained construction. That is why the power of the courts at times is to disregard the literal meaning of an Act and to give it a purposive construction. Nevertheless a purposive construction must obviously be in all cases a construction which gives effect to the legislative intention, whether or not the statutory language needs to be strained to achieve this.” “The term ‘regulations’ has of recent years been much used to denote ordinances having the force of law made by subordinate authorities under delegated powers. Regulations framed under an Act are of very great importance. Such regulations are framed for the successful operation of the Act. Without proper regulation, a statute will often be worse than useless. The contents in the correspondence exchanged between the officers cannot override the express provisions of the regulations made under any Act. When an Act enables an authority to make regulations, a regulation which is validly made under the Act, that is, which is intra vires of the regulation making authority, should be regarded as though it were itself an enactment. To break the regulations made under the authority of a statute is to break the statute itself.” (NS Bindra’s Interpretation of Statutes, 10th Edition) Mr. Mukherjee argued that it was not open for the Chairman to dilute the provisions of Section 42D(3) of the Insurance Act, 1938 in absence of amendment being carried out to the statute by the legislature. It was contended that the decision of the Chairman that the power of IRDA to consider insurance brokers renewal application is circumscribed by Section 42D(3) read with Section 42(4)(b)(c)(d)(e) and (f) is an error of law apparent on the face of record and is a total misreading of the provisions of law. Such action is ultra vires. The Chairman in the order considered the role of such a composite broker in the light of the IRDA Act and the Regulations framed there under. The Chairman also considered the nature of the fiduciary duty cast upon the composite broker in the light of the Regulations 2002 and more particularly Regulation 23. Such action is ultra vires. The Chairman in the order considered the role of such a composite broker in the light of the IRDA Act and the Regulations framed there under. The Chairman also considered the nature of the fiduciary duty cast upon the composite broker in the light of the Regulations 2002 and more particularly Regulation 23. The duties of the composite brokers are more onerous and stringent than is cast upon direct brokers as the composite brokers have a specific responsibility to hold the money received as premium from the direct insurers and claims amount from rein surer in fiduciary capacity in “Insurance Bank Account”. There cannot be any doubt and as observed by the Chairman that it is not mere violation by way of investments in mutual funds but it is an act of “removing” the money from the Insurance Bank Account wherein with a view to earn profits elsewhere and continuation of the Act for five long years in utter disregard of their fiduciary duty to safeguard the client’s money constitutes serious violation. Such violation continued 58 times over the period of 5 years. It was further held that such consistent withdrawal of policy-holder’s money from the designated account in a systematic manner and investing same for a different purpose rendered the credibility of the broker questionable under Regulation 9(2)(I) of the Insurance Brokers Regulations, inasmuch as there is a violation of Clause 15 of the Code of Conduct of the Insurance Brokers Regulations which requires every broker to abide by the provisions of the Insurance Act, 1938, IRDA Act, 1999 and the regulations made there under. The Chairman was of the view that the power to deny renewal of such licence are traceable to the following provisions:- i) Section 42E(2) of the Insurance Act ii) Section 14(D) of the IRDA Act iii) Section 9(2) of the IRDA Regulations,2002. The Brokers Regulations, 2002 in Schedule III laid down the code of conduct which was framed under Regulation 21 of the Brokers Regulations, 2002. Under the Code of Conduct, all insurance broker is required to follow recognized standards of professional conduct and discharge its functions in the interest of the policyholders. The said broker is required to conduct its dealings with clients with utmost good faith and integrity at all times. Under the Code of Conduct, all insurance broker is required to follow recognized standards of professional conduct and discharge its functions in the interest of the policyholders. The said broker is required to conduct its dealings with clients with utmost good faith and integrity at all times. The interpretation given by the petitioner if accepted would defeat the purpose and object of the IRDA Act, 1999 and Regulations framed there under. Such interpretation would make the regulation otiose and IRDA Act 1999 “would be worse than useless”. Both the Acts would have to operate and work in tandem, in the interest of policyholders, especially when monies are collected and held in trust in “IBA”. Keeping in view the objects and reasons and preamble of IRDA Act, 1999 and Brokers Regulations, 2002, it can be stated with certitude that no latitude can be given and laxity can have no place when there is a violation of fiduciary duty and breach of trust pertaining to preservation and utilization of premium and/or claim amount. From a collective perusal of the provisions of the Insurance Act, 1938 and the IRDA Act, 1999 with the Regulations, 2002, there cannot be any doubt that in considering an application for renewal of licence, the Regulatory Authority is required to take into consideration Regulation 9 of the 2002 Regulations and such considerations are consistent with the purpose and object of the said two statutes. The petitioner as broker should be aware of the provisions of the said Act and the Regulations framed there under. The certificate of renewal clearly mentioned that such certificate was issued under IRDA Act, 1999 and Brokers Regulations, 2002. The Chairman considered the continuous unauthorized misuse of money during the period from 2003 to 2008 to be a serious matter for non-renewal of the licence. Once a trust is lost, a trustee or a person in fiduciary capacity forfeits its right to act as such and this appears to be the predominant consideration in refusing to renew the licence. The Chairman referred to Section 42D(3), Section 42E, Section 42D(6) of the Insurance Act, 1938 and Section 14 and Regulation 9(1)(2)(i) of the 2002 Brokers Regulations in refusing to renew the licence. The Chairman referred to Section 42D(3), Section 42E, Section 42D(6) of the Insurance Act, 1938 and Section 14 and Regulation 9(1)(2)(i) of the 2002 Brokers Regulations in refusing to renew the licence. Considering the object of the 1999 Act and the Regulations 2002 which was framed under two statutes which are not in conflict with each other, the decision taken by the Chairman on proper consideration of the said statute and the Regulations framed there under, in my view, does not suffer from any error of law or without jurisdiction. In the narration of facts, and as summarized hereinabove, there cannot be any doubt that the Regulatory Authority in considering an application for grant of renewal would be required to take into consideration the provisions laid down in Regulation 9. The same is also clear from Regulations 13 and 14. Mr. Mukherjee, the learned Senior Counsel submitted that the plaintiff is not praying for a writ of mandamus requiring the Chairman to renew the licence but praying for quashing of the order in a fresh consideration of the application for renewal of licence on the basis of Section 42D(3) and not Section 42D(6) or Regulation 9 of the 2002 Brokers Regulations. In view of the discussions made above and having formed a considered view that reference to Regulation 9 or the other provisions of the Act in deciding the said application for renewal does not suffer from any illegality or any improper exercise of power, the order of the Chairman cannot be impinged. Although, Mr. Mukherjee emphasized that renewal as such is not a fresh grant and for which he has referred to the decision reported at 68 CWN 1036 (Satadal Basini Dasi v. Lalit Mohan Dey) does not require consideration in view of a clear pronouncement of the Hon’ble Supreme Court in AIR 1997 SC 412 (Gajraj Sign etc. v. The State Transport Apellate Tribunal & Ors.) which clearly says that renewal is a fresh grant. This Court is unable to accept the said contention. “The terms of a lease may provide for renewal or extension of the lease. The distinction between ‘renewal and extension’ of lease is chiefly that in the case of renewal, a new lease is required, while in the case of extension, the same lease continues in force during the additional period by the performance of the stipulated act. “The terms of a lease may provide for renewal or extension of the lease. The distinction between ‘renewal and extension’ of lease is chiefly that in the case of renewal, a new lease is required, while in the case of extension, the same lease continues in force during the additional period by the performance of the stipulated act. In other words, the word ‘extension’ when used in its proper and usual sense in connection with a lease means a prolongation of lease. A covenant for renewal is not treated as a part of the terms prescribing the period of lease, but only entitled a lessee to obtain a fresh lease. Renewal of lease is a creation of a fresh lease.” (Mulla’s The Transfer of Property Act, 10th Edition) In any event, any finding on this issue even in favour of the petitioner would not entitle the petitioner for renewal of licence. Moreover, the argument that was advanced by Mr. Mukherjee with regard to seriousness attached to an application for grant of renewal by relying upon the celebrated work on Administrative Law by De Smith as mentioned hereinabove, in my view, is restricted to a fair hearing. Mr. Mukherjee has relied upon the first line of the last paragraph at page 223 from De Smith’s Administrative Law, 4th Edition. The said paragraph is reproduced herein below:- “Non-renewal of an existing licence is usually a more serious matter than refusal to grant a licence in the first place. Unless the licensee has already been given to understand when he was granted the licence that renewal is not to be expected, non-renewal may seriously upset his plans, cause him economic loss and perhaps cast a slur on his reputation. It may therefore be right to imply a duty to hear before a decision not to renew when there is a legitimate expectation of renewal, even though no such duty is implied in the making of the original decision to grant or refuse the licence.” The paragraph would clearly show that the person aggrieved required to be heard before such adverse order may be passed. In the instant case following the principles of natural justice as embodied in Section 14 of the IRDA Act, 1999, hearing was given by the Chairman and the order clearly reflects a proper and judicious application of mind on all points and aspects of the matter that were raised before the said Chairman. Initially, the argument of Mr. Mukherjee with regard to hostile discriminations appeared to be quite attractive but on a deeper consideration of the same and after perusing the orders that were produced by both the parties, it appears to this Court that the Chairman was justified in not considering the said instances as same or similar to that of the plaintiff. The order in Reliance and Dastur would not show that there is any breach of any fiduciary relationship. The violation is not of Regulation 23(2)(a). The violation of Regulation 23 in Dastur’s case cannot be equated with the violation in the instant case. On the basis of the pleadings and the materials on record, it cannot be said that there is a hostile discrimination between the petitioner and the other brokers and/or Insurance Company. Moreover, the petitioner although assured the Chairman that they would produce the other bank account but had declined to do so when a reminder was given to them by the Chairman. The attempt to secret information coupled with a clear violation of Regulation 23 of the Brokers Regulations, 2002 clearly forfeit the right of the petitioner to make any claim for renewal of the licence. In view of the aforesaid reasons, the writ petition stands dismissed, however, there shall be no order as to costs. The urgent xerox certified copy of this judgment, if applied for, be given to the parties on usual undertaking.